Steven Strong v. Bank of America
16-11346
| 5th Cir. | Dec 11, 2017Background
- In 2004 the Strongs obtained a home mortgage; they fell behind in 2012 and applied for a modification while Bank of America serviced the loan; the loan transferred to Green Tree in 2012.
- Green Tree repeatedly told Mr. Strong he could apply for a loan modification but later sent a December 19, 2012 letter saying he was ineligible due to Texas constitutional limits; Strongs appealed internally but were denied.
- Green Tree later sent a statement showing a reduced monthly payment that the Strongs paid; shortly afterward Green Tree sent a default/foreclosure notice with a large cure amount, though no foreclosure occurred.
- The Strongs sued in Texas state court under three subsections of the Texas Debt Collection Act (TDCA), alleging misrepresentations that a modification was available; they limited initial damages statements to "$100,000 or less" but later disclosed damages exceeding $75,000.
- After the Texas Supreme Court’s Sims decision, the parties negotiated and implemented a permanent modification effective January 1, 2015; the Strongs moved to amend their complaint in 2015 (denied) and later learned Green Tree had an internal policy to deny Texas home-equity modifications.
- The district court granted summary judgment for Green Tree, finding the modification communications were not "debt collection" under the TDCA and therefore no viable TDCA claim; the Strongs appealed remand denial, denial of leave to amend, and the summary judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Timeliness of removal / remand | Removal was untimely because original pleadings put Green Tree on notice foreclosure/property value was at issue; discovery in state court waived removal right | Removal was timely only after disclosure response showing >$75,000; state-court discovery short of a merits adjudication does not waive removal | Removal was timely; remand denial affirmed |
| Denial of leave to amend | Denial was an abuse of discretion; amendment necessary after learning Green Tree policy | Motion was untimely, violated local rules, caused undue delay and prejudice, sought many new claims late in litigation | Denial was not an abuse of discretion; affirmed |
| Whether modification communications are "debt collection" under TDCA | Green Tree’s statements that a modification was available were deceptive efforts to collect debt in violation of TDCA §§ 392.304(a)(8),(14),(19) | Communications concerned loan modification/renegotiation, not debt collection; absent evidence they were a ruse to collect debt, no TDCA liability | Communications were not "debt collection" as a matter of law; summary judgment for Green Tree affirmed |
| Whether alleged statements misrepresented services (TDCA) | Even if not "debt collection," statements misrepresented Green Tree’s services and eligibility for modification | Court need not reach misrepresentation element once no debt-collection activity is shown | Court declined to decide misrepresentation because claim fails for lack of debt-collection activity |
Key Cases Cited
- Mumfrey v. CVS Pharmacy, Inc., 719 F.3d 392 (5th Cir.) (timing for removal under 28 U.S.C. § 1446(b))
- Fields v. JP Morgan Chase Bank, N.A., [citation="638 F. App'x 310"] (5th Cir.) (loan-renegotiation communications generally not debt collection)
- Thompson v. Bank of Am. Nat’l Ass’n, 783 F.3d 1022 (5th Cir.) (discussing when modification talks might be actionable)
- Singha v. BAC Home Loans Servicing, L.P., [citation="564 F. App'x 65"] (5th Cir.) (modification promises alone insufficient to show TDCA "debt collection" without ruse to collect)
- Chavez v. Wells Fargo Bank, N.A., [citation="578 F. App'x 345"] (5th Cir.) (poor customer service or misleading modification talk not automatically "deceptive means")
- Lozano v. Ocwen Fed. Bank, FSB, 489 F.3d 636 (5th Cir.) (standards for denying leave to amend)
- Tedford v. Warner-Lambert Co., 327 F.3d 423 (5th Cir.) (waiver of removal requires clear and unequivocal conduct)
- Sims v. Carrington Mortgage Servs., L.L.C., 440 S.W.3d 10 (Tex.) (Texas Supreme Court decision affecting availability of certain mortgage modifications)